The Federal Mortgage Bank of Nigeria (FMBN), has said that it cannot be funding houses that Nigerians cannot afford and developers should come up with a system of building cheaper houses for low income earners.
Group head, Cooperate Communications, FMBN, Lawal Isa Kauri stated this while responding to a request by a developer, the managing director, Drekford Global Concept Limited, Mr Daniel Oparinde, who called on the bank to re-assess the mortgage system to reflect the current economic realities in the country.
He appealed to the FMBN to increase the current N15 million mortgage cap in view of the high cost of building materials in the country.
Speaking on the rising cost of construction materials, the real estate developer argued that the federal mortgage system is no longer adequate to address the housing needs of Nigerians, stressing that the private sector should be involved in bridging the housing gap by providing attractive mortgages to citizens.
Oparinde stated, “Gradually, the Nigerian mortgage system is getting better but the mortgage system needs to start working with the reality of the current prices of construction materials. It also needs to work with the reality of how much it costs to deliver a home.
“The cap, for example, is N15 million. A decent apartment located within the city would cost more than that except the government is encouraging people to go to remote areas to own a home. Even at that, the high cost of building materials is eating a large chunk of the money.
“I would be saying at this point that it is important that the Federal Mortgage Bank be looking at these factors and consider and reassess how much an individual could access when it comes to the federal mortgage.”
Responding, Kauri said that FMBN is looking at the bigger picture not only on the side of developers.
You should note that we are always conscious of the affordability of the National Housing Fund (NHF) contributors. Unless there is commensurate increase in salaries.
“We cannot be funding houses that people cannot afford. Developers should come up with system of building houses that are cheaper and affordable to the low and medium income earners,” He stated.
According to him, the loan to developers is at 10 per cent, National Housing Fund (NHF) loan to beneficiaries is at six per cent, construction loan is at seven per cent, cooperative loan is at 9.5 per cent and rent to own is at seven per cent.
He refused to respond to what commercial banks’ rates for mortgage are, saying, “You can ask commercial banks what their rates is. I don’t want to speak on their behalf.”
Another developer, a managing director of Shodel luxury Homes, Shodunke Idris Samuel stated that if the FMBN is suggesting that developers should find a system of building affordable housing for the low income earners, it now depends on the area the developer is looking at.
In satellite towns like Lugbe, Kuje, Kurudu etc it is possible to get low cost housing estates but that is if the developer decided to do a promo but that cannot be possible inside the main city of Abuja.
“The rate of buying land and doing the subdivision and reselling to subscribers is even going up. And after that you must compensate the villagers, spend money on infrastructure before you know the developer will start running on the short. Though there are areas that they can do that but it is only at the outskirts of the city.
“So I’m also suggesting that the FMBN should look into their mortgage system because we both know that cost of building materials is really high and it is not only affecting developers but everybody,” Samuel said.
- Source : Leadership